Supply shortfall pushes house prices up across the East Midlands

House prices have risen again in the East Midlands in a trend that dates back to June 2013, according to the latest RICS UK Residential Market Survey.

In October, 68 per cent more chartered surveyors saw house prices rise rather than fall in the region, and house prices are expected to rise by an average of 2.7 per cent per annum, over the next five years

For the third consecutive month, prices are reported to have risen in all parts of the UK. East Anglia has consistently outperformed all other regions in these months and a net balance of 91 per cent of respondents reported prices in the area to have risen in October. Prices rose in the East Midlands despite demand from potential buyers falling moderately during the month with a net balance of 20% of contributors seeing a decrease in new buyer enquiries.

The combination of a fall in demand and a shortage of stock on the market are taking their toll on sales activity and a net balance of 11 per cent of respondents reported a decrease in transactions over the month. However, going forward, sales expectations for the next three months are positive, with 33 per cent more respondents expecting to see a rise rather than a fall over this time period.

In the regions lettings market, growth in demand continues to outpace supply and rent expectations remain firm. This has been the trend nationally for some time, with the growth in demand outstripping that of supply consistently since 2009.

A net balance of 62 per cent of respondents in the East Midlands expect rents to increase in the coming three months and rents are forecast to rise by 2.7 per cent on average, over the year to come.

Simon Rubinsohn, RICS Chief Economist, said: “It is hard to get away from the issue of supply when it comes to the current state of the housing market. The legacy of the drop in new build following the onset of the global financial crisis is now really hitting home, with both the sales and letting markets continuing to show demand outstripping supply on a month by month basis.

“If the five year projections from members regarding the outlook for both prices and rents is anything to go by, property is set to become even more unaffordable going forward making the Government’s focus of boosting the delivery of new homes absolutely critical.”